Milan — Italy’s Banca Ifis on Wednesday said it would pay €298m in cash and shares to buy rival speciality lender illimity to bulk up in a toughening market.
The move highlights accelerating consolidation in Italian banking, where No. 2 bank UniCredit has launched an all-share bid for smaller peer Banco BPM. BPM in turn is trying to buy fund manager Anima Holding.
Ifis and illimity specialise in financing small- and medium-sized firms. Ifis also runs an impaired loan recovery business, an activity which illimity is phasing out.
Illimity had no immediate comment.
Ifis will pay €14.14 cash and a newly issued share for every 10 illimity shares tendered, it said in a statement. That values each illimity share at €3.55 based on Tuesday’s closing prices, and amounts to a 5.8% premium, it said.
That’s higher than the 0.5% premium UniCredit has offered for BPM and lower than the 8.5% BPM is offering for Anima.
Illimity shares were 6.9% higher at €3.61 in morning trade, above the bid's price. Venice-based Ifis lost 1.4%.
Ifis estimates benefits from the merger at about €75m a year before taxes, of which two-thirds will be from cost cuts.
A digital-only, cloud-based bank founded by veteran Italian banker and former industry minister Corrado Passera with backing from former Barclays CEO Bob Diamond, illimity debuted on the Milan bourse in March 2019 at €7.3 a share.
Its price has been declining steadily in recent years from a high of almost €14 in November 2021 as illimity overhauled its business model and phased down its bad loan operations.
In November the company agreed to sell a controlling interest in its technology assets to private equity firm Apax in a deal set to yield a €52m capital gain.
Italy’s bad loan market, Europe’s biggest, has dried up as banks’ credit quality improved. Since 2021 tighter rules have heightened the challenge for debt recovery specialists.
Ifis estimated integration costs at €110m, which would be booked in 2025. The merged entity is expected to have a pro forma best-quality capital ratio above 14%.
“Further banking consolidation is to be expected in coming years,” Ifis said. “Speciality lenders too must evaluate acquisitions to grow stronger and remain profitable.”
Ifis’s controlling shareholder La Scogliera, the holding company of Italy’s Furstenberg family that holds 50.5% of the bank, plans to maintain control of the group.
“The goal is to create a European industrial player capable of tackling the challenges posed by the banking market,” Ernesto Furstenberg Fassio, CEO of La Scogliera and president of Banca Ifis, said in a separate statement.
Reuters
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